Carvana Co. (CVNA) Investigation

The investigation is focused on the propriety of Carvana’s disclosures about related party transactions under applicable accounting rules and SEC rules and regulations.

On January 2, 2025, Hindenburg Research, a prominent forensic financial research firm, released an incisive report titled "Carvana: A Father-Son Accounting Grift For The Ages." This comprehensive document is the culmination of four months of meticulous investigation, involving 49 interviews with industry experts, former employees, competitors, and related parties of Carvana.

The report highlights a significant finding: “[d]espite facing bankruptcy risks in 2022 and 2023, Carvana’s stock spiked 284% in 2024, with investors believing the company’s worst days are behind it [….] [but] Carvana’s turnaround is a mirage.”

Key to Hindenburg’s scrutiny is Carvana’s purchase commitment agreement with Ally Financial, through which the company offloaded $3.6 billion in vehicle loans (~60% of Carvana’s total originations) in 2023. Hindenburg's analysis reveals a troubling trend: as of September 30, 2024, Carvana’s sales to Ally had waned significantly, and that:

1. “a new, unnamed buyer has quietly emerged exactly when Carvana needed it[;]”
2. “[i]n the past two quarters, Carvana sold $800 million in loans to ‘an unrelated third party[;]’”
3. “[t]he mystery buyer made up 18.3% and 16.3% of total loan sales in Q2 and Q3 2024[;]” and
4. “[l]ien filings reveal the buyer is likely a trust affiliated with Cerberus Capital, where Carvana Director Dan Quayle is Chairman of Global Investments, indicating the new buyer is an undisclosed related-party, contrary to the company’s claims.”

The report's publication triggered an immediate market response, causing Carvana’s share price to plummet by $25.84, or 12.7%, over two trading sessions, concluding on January 3, 2025.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the CVNA investigation about?

We are focused on whether Carvana may have misled investors during 2024 if, as Hindenburg alleges, the company offloaded vehicle loans to a related party in the wake of Ally’s apparent scaling back of its purchases.

WHAT SHOULD I DO?

I worked at CVNA. What should I do?

If you were an employee of CVNA, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in CVNA, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any CVNA investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.